The Press SATURDAY, JULY 5, 1975. Sharing the risks of Middle East trade

Press, Volume CXV, Issue 33887, 5 July 1975, Page 14

The Press SATURDAY, JULY 5, 1975. Sharing the risks of Middle East trade

The Middle East is no longer “ terra incognita ” for New Zealand’s exports, but it remains a region of uncertain promise and unpredictable difficulties. For New Zealand's producer boards and companies to invest heavily there in pursuit of doubtful markets might be a serious misuse of resources which are already stretched. That makes particularly attractive a proposal that the Export-Import Corporation should establish cool storage facilities there on behalf of meat, dairy products, and fruit exporters. Supporting senices of this kind, and the co-ordination of export initiatives, are exactly the kind of facilities that the corporation should be offering. Those who ask to use its services — in this instance, the producer boards — should expect eventually to pay a fair price for them; the corporation must not become a channel for thinly-disguised export subsidies. In return, the corporation might be expected to develop and share some expertness in meeting the difficulties of opening up new markets To engage the corporation in export promotions of this kind is something much more attractive than the proposal last week from the Minister of Trade and Industry (Mr Freer) who suggested that the corporation might act as the Government’s agent in barter deals, including the exchange of New Zealand primary products for Arab oil. The dangers inherent in such deals should be obvious: the producer boards can be expected to resist any move which reduces New Zealand’s ability to negotiate the best prices for its exports on world markets. Even the proposal for shared cool store facilities fn the Middle East will need careful examination if certain pitfalls, inherent in trade with that region, are to be avoided. Some local capital might have to be used: in most Middle East countries that will mean Government capital. If. for example, cool stores are built by the Government of Iraq and leased to the corporation, care will be needed to ensure that the terms do not provide the Iraqis with a lever by which to manipulate the return to New Zealand on its sales, or the terms on which it is permitted to trade. New Zealand would gain little if the price of exporting to Iraq turned out to be the payment of a substantial discount to the Government in Bagdad through the hire of essential, specialised facilities. The safest place for any New Zealand cool store in the region is probably Iran, not least because the Iranians have had the most experience in trading with the West and have a reputation of being hard-headed, but fair. In Iran. New Zealand would avoid the dangers inherent in the instability of almost all the other Governments in the region and would still have the advantage of a central store in the Persian Gulf. Iran is also less likely to play favourites or to impose restrictions on the countries which it would permit New Zealand to supply from the stocks kept on its soil. Trade and politics are inevitably mixed, a point the Prime Minister expressed clearly earlier this week when he said: “ New Zealand has to explore every market available: this is what foreign policy is all about ”. But circumstances in which a trading relationship with one country may have an adverse effect on trade with another country are relatively rare in New Zealand’s experience. The growing trade with both China and Taiwan is not hindered by political implications, thanks to a series of polite fictions maintained by all parties. In the Middle East the intensity of Arab feelings towards Israel, even the intensity of the hostilities which arise from time to time between Arab States, could wreck the prospects for New Zealand’s trade if New Zealand seemed to be too closely allied with the “ wrong side" Through the Export-Import Corporation the risk can be shared, relatively cheaply, by the export groups which are attempting to penetrate the region. Given adequate appreciation of the political complexities, the Middle East should become a significant market for New’ Zealand foods and manufactures. But it must be remembered that New Zealand can expect no special favours there; what this country has to sell is not regarded as essential to their well being by the purchasers. New’ Zealand needs to make it clear from the start that it. too. can survive without the Middle East. A rush to sell, on almost any terms and at almost any price, while other export markets are depressed, should have no place in New Zealand’s export strategy.